Budgetary Control

“Budgetary control is part of overall organisation control and is concerned primarily with the control of performance. The use of budgetary control in performance management has of late taken on greater importance especially as a more integrative control mechanism for the organisation.” Discuss.

Introduction

Performance management is described as “the process of quantifying the efficiency and effectiveness of an action” (Neely, Kennerley and Adams, 1995).To control the performance of mangers, we can use budgetary control and financial control. To discuss the above topic,I was thinking two question, Why is budgetary control primarily the control of performance management? And how has this mechanism taken more importance as a more integrative control system for organisation.

In my article, I, firstly, will introduce some budgetary control definitions from deferent researchers and explain the first question from history research and practices being made. Secondly Analysis the current environment and find reasons how has this mechanism taken more importance as a more integrative control system in organization. Lastly ,critically to point out the strengths and limitations of budget control, find some solutions or suggestion for the limitation.

Budgetary Control

The budgetary control system plays an important role in current organization control. For budgetary definition, different researchers gives their definitions from different sides in their works .Buckley and McKenna (1972) describe budgetary control as consisting of planning, controlling, coordinating and motivation through money values and departments within an organization. Hofstede (1968, p15)describes budgetary control as planning translated into monetary terms. (Bill Ryan,2007, p384) Budgetary control is a major aspect of management control. While, personally, I agree with Bill Ryan(2007) that the essence of the budget process is the influencing of management behavior by setting agreed performance...